1. Field of the Invention
The present invention generally relates to steel manufacturing and, more particularly, to a method and system for optimizing small-lot production runs in the steel industry by adopting a make-to-order model for steel slab production and using order-planning and production-planning tools to identify appropriate clusters of orders and then balancing the size of the clusters in an effort to maximize the number of clusters that satisfy optimal production-run size constraints.
2. Background Description
Steel manufacturing is a three-part process that begins with making large slabs of steel from iron ore (and/or recycled steel) and coal and other materials. Once the steel is made, it is rolled and finished.
The production of slab steel is a batch process in which production runs involve extremely large quantities of material. Steel slabs are typically produced in 250-ton batches, called charges or heats. A single production run, known as a cast, preferably involves the production of multiple charges of the same grade of steel.
Steel producers prefer to run multiple charges per cast because there are significant fixed costs and downtime associated with cleanup and setup between casts. As a result, it is inefficient to have frequent changeovers from one cast to another. In addition, the downtime associated with cleanup and setup between casts will hurt capacity utilization rates are too small. Steel makers, therefore, plan for casts to be as large as possible in order to minimize changeover costs and maximize capacity utilization.
There is a noticeable threshold of efficiency at casts of at least 750 tons, creating a strong preference for casts of at least three 250-ton charges. When the number of 250-ton charges in a cast is less than three, there is a noticeable negative impact on productivity.
One solution to the problem of attaining appropriate scale in slab steel making is to increase the size of small-lot orders by making more and holding the excess amount in inventory. Such a solution is less than ideal, however, in part because of the made-to-order nature of the steel industry.
Steel manufacturing has traditionally been a made-to-order business in which steel is made, rolled, and finished in a continuous process with a particular customer's order in mind. The solution to small-lot order problems has been to increase the size of the casts to at least three charges by making, rolling, and finishing (or semi-finishing) more steel than a customer has ordered, with the excess portion being carried in inventory until a customer is found. Thus, the customer-ordered steel and the steel made for inventory are not decoupled until after the finishing process.
The present invention, recognizing the steel industry's need for large production runs and the expense of carrying inventory, offers a solution to enable steel producers to better optimize production runs.